Great point, I 100% agree with your viewpoint and concern here. I had the same concern on a couple of points.
If the rewards diminish for a single pool to avoid one player being a mega pool, then what stops them from simply spinning up a hundred pools with a large bit of capital to gain outsized influence on the network? Nothing at present stops anyone from doing this and perhaps this is OK? There is a means of attack by a thousand pools, though their ability to subvert or deny other smaller pool operators is limited. Still at a certain size a mega-multi-pool operator does start to crowd others out and potentially drive down rewards.
More directly to your point I think we need a representative delegate structure for governance and separate from staking. If every single person who owns ada is expected to vote, then it would be rare to ever get more than 1% of people voting on anything. The below solution would only partially solve this as not everyone would bother delegating their vote or staking their ada, but it would improve overall participation. Will this democracy have a ‘quorum concept’…if so, then a true majority vs a tiny plurality of the vote would be very hard to achieve and could grind progress to a halt if governance demands we have 50%+ of all ada holders to win a vote. I’d argue many non-voters are not ‘not voting’ on purpose, but are simply unaware of their voting rights or how to execute them, though many folks will not care about governance or ever delegate their holding’s voting rights.
I think a solution would be to have ‘Delegate Pools’ for voting similar to ‘staking pools’ to entirely split governance from staking processes. These could be very simple websites or other means of hosting information with links/information in the wallets similar to the staking pools page (I think the treasury could fund a common governance site for all potential delegates/representatives to post) then their voting records would be fully transparent and visible to avoid ‘faithless electors’ who say one thing and do another. Or at least give us a chance to see if they use our votes in ways we don’t agree with or are inconsistent with how they said they would vote.
This site can function both as the ‘parliament’ of cardano where the governance, bill proposal, and voting schedule is run - but also as the delegate pool mechanism to allow for this.
Also…what about currency vs governance. When I buy something from you and give you my ada which has governance delegated…does my delegation continue? Does my delegation get removed each time ada is transferred? In this way the transfer of ada should probably strip governance delegation…obviously transferring and staking do not have this issue because in order to transfer, one must first unstake their ada. By splitting governance and voting rights away from staking or holding at the time of a vote for individuals…we create an extra problem, but it can be solved by stripping governance delegation on any transferred ada.
Representatives can give a short speech and some text on their values (translated into many languages by the Cardano delegate site). and then you can select someone you like to delegate your vote to…you can vote yourself directly if you like…or you can just ignore the governance aspects all together. This is great for democracy as we do not need to hold ‘elections’ at set intervals, I can simply change my delegation to someone else on the spot if I want to.
- The risk of tying staking and governance rights together is real. I’d say the number 1 risk is that if a cabal of greedy pool operators become mega-multi-pool operators and can influence or win any vote they want. The number one conflict and possible action they’d take which is ‘not good for Cardano’ would be to increase the fees. They are stake operators and they have done it to make money, why not create a vote on and then pass a vote with their overwhelming power as the largest set of stake pool operators to increase the fees so they get richer. The fees should be as low as possible to both make the ecosystem work by paying people a fair amount to operate pools, but we also need low enough fees for defi to be possible and cheap fees to run the entire ecosystem and for future concerns like being a real world everyday currency and to bank the bankless etc.
A risk exists if stake pool operators de facto gain governance delegation. I think their interests to make money are potentially in conflict with the rest of the Cardano ecosystem and the broader user base.
Thanks again for raising this point!